Former broker sues Edward Jones for 'systemic' racial discrimination
A former broker is suing Edward Jones over allegations of "systemic, intentional race discrimination" and policies that "unlawfully segregate its workforce."
Wayne Bland is asking the eastern division of the U.S. District Court for the Northern District Court of Illinois to put a halt to the alleged discriminatory practices at the firm in a class-action suit filed on behalf of himself and other African-American advisors at Edward Jones.
Bland "alleges that Edward Jones employs companywide policies and practices regarding training, compensation, partnerships and the assignment of territories, business opportunities and sales support that unlawfully segregate its workforce and deny African-Americans the income and advancement opportunities because of their race."
Bland's lawsuit targets a powerhouse in the brokerage sector, with more than $1 trillion in AUM at the end of 2017 and a roster of more than 16,000 brokers.
The firm's sustained growth included a sharp uptick last year, and the firm has set out a goal of exceeding 20,000 financial advisors, with no plans to stop there. With that growth has come a focus on diversifying the ranks of its workforce, which would seem to run counter to the discriminatory behavior alleged in the new lawsuit.
In the complaint, Bland says that he is aiming to achieve "meaningful reform" at Edward Jones, seeking injunctive relief on behalf of the class and other remedies, including a potential reinstatement at the firm for him and other former brokers who left after experiencing racial bias.
In a separate case, Bland and three other former Edward Jones employees are suing to overturn the firm's practice of forcing trainees to sign contracts vowing to repay training expenses of up to $75,000 if they leave the firm within three years.
"This is the second purported class-action lawsuit that this former financial advisor has filed against the firm in the past two months," Alex Reed, a spokesman for Edward Jones, writes in an email. "As we have said previously, we strongly disagree with the allegations in each of his lawsuits and we intend to vigorously defend both in court."
When the CFP Board surveyed members on the stark lack of diversity in the profession, opinions on the root causes of the problem were split along racial lines.May 11
"Real diversity and inclusion is when we achieve gender parity and adequate representation of ethnic backgrounds," says Monica Giuseffi, principal of financial advisor inclusion and diversity at the firm.November 20
Bland worked for Edward Jones from November 2014 to March 2016, and during that time "was denied resources and business opportunities, including lucrative client accounts, favorable offices and territory, sales and administrative support, and inclusion in favorable broker teams and pooled accounts, on account of his race," according to the complaint in the racial discrimination suit.
He goes on to allege that Edward Jones operates with an institutional stereotype that undervalues the abilities of black advisors, resulting in a brokerage workforce that is 94% white.
"African-Americans are underrepresented both as FAs and in management at Edwards Jones, and are paid substantially less than their counterparts who are not African-American," he says in the court filing.
In part, Bland attributes that compensation disparity to Edward Jones' centralized oversight of its wealth management business, where advisors are evaluated alongside their peers based on commissions earned, and black advisors are often denied opportunities to grow their book of business.
Advisors have two paths when starting out at Edward Jones: going it alone at a home office, or joining up with an existing office. In the latter scenario, advisors have the benefit of office space, mentorship and administrative support. In turn, advisors who join up with those so-called Legacy or Goodknight programs are generally far more successful than those who try to make a go of it from a home office.
"It kind of gives you a leg up. He was given neither of those opportunities," says George Robot, a partner with the civil rights law firm Stowell & Friedman who is representing Bland in both of his complaints.
At Edward Jones, African-Americans are "disproportionately excluded" from those programs, Bland alleges, and says that the firm routinely assigns African-American advisors to less lucrative territories.
"The firm also reserves territories with greater investment opportunities for non-African-American FAs in order to race-match its FAs to the neighborhood demographics," the complaint alleges.
That was the experience that Bland describes in his complaint. He claims that he was denied the opportunity to join a Goodknight partnership, and his request to prospect in an affluent and largely white neighborhood was rejected. Instead, a white advisor was assigned to that area, and Bland was relegated to a poorer, heavily African-American neighborhood where Edward Jones had previously closed an unsuccessful office.
Bland says that after repeated requests he managed to negotiate a position with an established Edward Jones office, but that he was provided a storage room for an office and was the target of "racially hostile statements." Bland claims that he reported this activity to the firm's management, but then suffered "retaliation and further discrimination."
"They really didn't take his complaint seriously," Robot says.
Ultimately, when the senior advisor to whose office Bland had been assigned ended up exiting the firm, he was passed up for the book of business.
"Even though by that time Mr. Bland had been in the office, they ended up giving it to a white trainee with lesser experience at the firm and the industry," Robot says. At that point, Robot says that Bland "saw the writing on the wall" and determined to exit the firm.
Today, Bland is no longer registered as a broker, and instead works as a state-registered investment advisor in North Carolina, according to Robot.
Bland is asking for a jury to determine a monetary value for him and other African-American advisors to recoup lost earnings and other employment benefits.
Robot says that several African-American brokers have expressed interest in joining the class-action case against Edward Jones, but that it's too early to guess how large the class might become or when the court will determine whether to grant certification.
"We hear from people all the time, so people have been responding," he says. "We're just at the beginning."